Sunday, 16 March 2014

Soda taxes still don't work

Out here in the real world (ie. away from the fantasy computer models of 'public health'), there is plenty of evidence that sin taxes are highly inefficient, create unintended consequences and don't have the impact that campaigners think they will.

One of the main flaws in 'public health' models is the reluctance to estimate what the substitution effects will be (ie. what products people will consume if they cut down on the targeted product.) This is a major issue when it comes to food and drink because people obviously need to eat and drink something.

One study (Fletcher et al., 2010) that looked at the effect of soda taxes on children and adolescents (using real world evidence from the USA, rather than a theoretical model) found that the "reduction in soda consumption is completely offset by increases in consumption of other high-calorie drinks".

Our results suggest that soft drink taxation, as currently practiced in the United States, leads to a moderate decrease in the quantity of soft drinks consumed by children and adolescents. As a result, soft drink taxation may yield lower revenues for states than expected if behavioral responses to the tax are not accounted for. Additionally, soft drink taxes do not appear to have countered the rise in obesity prevalence because any reduction in soft drink consumption has been offset by the consumption of other calories.

The 'public health' response to this kind of news is usually to complain that the tax (which they campaigned for) is too low to make much difference. Last year, another group of researchers found that soda taxes don't work and raised this very question.

Our research does not support the theory that soda taxes have a negative effect on body-mass index. Current soda tax rates range from two percent to 7.25 percent and it’s possible these may not be high enough to affect BMI. Further research that addresses consumption and includes data on local soda taxes is warranted.

This week, the team that conducted the 2010 study have provided an answer to that question. In a study of calorie consumption in places that have higher soda taxes, they conclude that the answer is still 'no' (Fletcher et al., 2014)...

Together, our results cast serious doubt on the assumptions that proponents of large soda taxes make on its likely impacts on population weight. Together with evidence of important substitution patterns in response to soda taxes that offset any caloric reductions in soda consumption (Fletcher et al., 2010a), our results suggest that fundamental changes to policy proposals relying on large soda taxes to be a key component in reducing population weight are required.

Any minute now, those evidence-based folk at Action on Sugar will mention these studies, right?

About Me

Writer and researcher at the Institute of Economic Affairs. Blogging in a personal capacity.
Author of Selfishness, Greed and Capitalism (2015), The Art of Suppression (2011), The Spirit Level Delusion (2010) and Velvet Glove, Iron Fist (2009).

"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience."